NEW INDIA ASSURANCE CO LTD Vs. V BOMMI

JUDGEMENT

(1.) ON 18/3/1997, one Vijaya Baskaran (the deceased) was proceeding on his motor cycle, when near the Kathipara Junction, the insured lorry bearing No. TN 21-U 1305 hit him and caused fatal injuries. According to claimants, the legal representatives of the above Vijaya Baskaran, it was rash and negligent driving of the lorry driver which caused the accident. They claimed Rs. 1,00,00,000 as compensation since according to them, the deceased was the proprietor of Saran Engineers and Builders and was earning between Rs. 25,000 and Rs. 35,000 per month. The owner of the lorry, who was the respondent No. 1 in the claim petition and who is respondent No. 5 herein, remained ex parte initially and then sought to set aside the ex parte order and contested the claim. According to the owner, the deceased was under the influence of alcohol and fell down in his attempt to overtake the vehicle that was going in front of him.

(2.) THE appellant insurance company, which was the respondent No. 2 in the claim petition, disclaimed its liability on the ground that there was no subsisting insurance policy in respect of the lorry on the date of the accident. THE vehicle was covered by the policy for the period from 26/8/1996 to 25/8/1997. THE owner of the vehicle had issued a cheque on 23.8.1996 for Rs. 12,190. THE cheque was returned for want of funds. On 5/9/1996, the appellant received the cheque from the bank and intimated the fact of dishonour to the owner of the vehicle on 18/9/1996. THE intimation was sent by R.P.A.D. THEre was no response from the owner and the policy was cancelled. THErefore, on the date of the accident, viz., 18/3/1997, there was no policy. On 19/3/1997, the owner approached the insurance company and took a fresh policy. THE appellant examined the bank officer, RW 5, to support their case. THE Claims Tribunal gave an award for a sum of Rs. 25,00,000. Aggrieved by that, the present appeal has been filed.

(3.) THE decisions relied upon are discussed hereunder: In New India Assurance Co. Ltd. v. Rula, 2000 ACJ 630 (SC), the Supreme Court held that a contract of insurance like any other contract is concluded by the offer and acceptance and liability would arise only on payment of premium. In that case, the cheque was issued on 8.11.1991 towards premium, it was dishonoured and the insurance policy was cancelled. In that case, the accident took place on 8.11.1991. THE Apex Court held that the subsequent cancellation of the insurance policy on the ground of dishonour would not affect the rights of a third party which had accrued on the date when the policy was issued. THE subsequent cancellation of insurance policy will not affect the rights already accrued in favour of the respondent No. 3. Learned counsel relied on this decision to draw the inference that this would clearly show that if on the date of the accident the policy had already been cancelled, then the insurer can rightly defend the claim made against him.